What is Umbrella Insurance?
An umbrella policy is excess liability insurance that provides an additional layer of protection against liability claims and lawsuits brought against you. It is typically available in $1 million increments, up to $5 million.
Although the liability coverage under your home and auto policies provides basic protection, this coverage may not be enough to pay for damages in the event of a serious accident/incident, especially if there are multiple people injured.
For example, if a jury awards $1 million in damages, and you only have $300,000 in liability coverage, you are responsible for the remaining $700,000.
Umbrella Policies in Action:
Entertaining at Your Home:
Say you have a party at your house and your deck collapses, causing injury to multiple people. Your liability limits of $300,000 may not be enough to pay for the medical bills, lost wages, and pain & suffering settlements for each injured person. If you are entertaining guests where alcohol is served, and a guest drives home after drinking and gets into a serious accident, you could be at-risk for being sued
Dog Bites:
Imagine if your dog were to bite a child causing serious injury or disfigurement. This would be detrimental for the child and his/her parents. Your underlying limits may not be enough to cover the damages.
Auto Accidents:
If you are at-fault for an auto accident involving a pedestrian or motorcyclist, you could cause serious injury or even death to the other person. In this case, your underlying liability limits may not be sufficient to pay for the damages, especially if there is more than one person injured.
How it Works:
If the liability limits are exhausted on your auto or home insurance, your umbrella insurance would take over and provide you with additional protection of at least $1 million, or up to the level of coverage you purchased. For example, if you have $500,000 in liability coverage on your auto policy and $1 million umbrella coverage, your total auto liability coverage is increased to $1.5 million.
Essentially, an umbrella policy gives you excess liability coverage on top of your other policies. Umbrella insurance also provides some coverage that your other policies do not, including, driving in a foreign country, renting a boat, libel, slander, or defamation of character.
If you have any additional questions about umbrella insurance, contact your agent at Lauber & Will Insurance today!
